Despite the financial freedom that Decentralized Finance popularly called DeFi brings, it comes with the Achilles heel of volatility.

Until the narrative is proven wrong, volatility, crashes, and any other way you want to describe it will always be a norm in DeFi.

According to reports, over 40% of people who would have entered the cryptocurrency space are hesitant due to the volatility that comes with the price.

You can enter a trade and be on so much profits, and decide to shut your eyes for a few minutes. There is every possibility that by the time you return, you will have been liquidated.

It has happened to be more times than I can count, so I am very certain of what I am saying.

Weeks of staking up funds, and losing it through poor management in one liquidation event. It’s not something everyone should experience.

Here are some strategies that I wish I knew when I first started trading. These strategies will play a huge role in helping you weather the storm despite the volatility of the DeFi market.

Recognize When You are Trading with Emotions and Manage Your Emotions Well

During trading, it is usually a herculean task to take away emotions from the actual trade. Those who have been able to do this are pro traders who have been able to be in tune with their emotions and manage them appropriately.

If you want to stay above the volatility of the market, you must be in full control of your emotions. I know how many times I have neutered into a trade from hear says, FOMO (fear of missing out), greed in a bid to recover what I lost before, as well as fear.

The ratio of when it worked to when it didn’t work is very wide. In most cases, it didn’t work and I had to bear huge losses.

When you allow your emotions to control you, you’ll only find information that suits the pre-existing biases you think are right. However, if you calm down to think clearly, you’ll discover that the reality of things is different from the information you think is right.

In some cases, greed can allow you to keep holding and expecting more profits instead of selling a part of your bag and taking profits. In most cases, that turning point and confusing time when you are contemplating “should I, should I not,” would have been in your favor, but your emotions were preventing you from seeing that.

Once you can manage your emotions, you’ll be able to trade far more objectively than you thought possible and this tends to have a positive effect on the kind of profits you will get per trade.

Trading objectively, with your emotions in check and well-managed allows you to open your mind to the available information in the market and which you should capitalize upon. Now why wouldn’t you stay afloat market volatility with this?

Always Diversify Your Portfolio

You can’t have the bulk of your portfolio centered on one token, especially one that is not in stables. Well, except you have so much liquidity to dish out. Anything can happen and your family member isn’t the owner of the market, nor the project that you so believe in.

Diversifying your portfolio can protect you from liquidation and having to start your life afresh. When you spread your liquidity over multiple projects, you not only get more ROI but the effect of the market’s volatility is smoothened.

A vivid example is this- instead of using all your liquidity to buy token A, you can spread it and buy tokens B, C, D, E, F, and G…. Own major coins like Bitcoin, get ETH and still get other tokens that you have done due research on.

Aside from keeping you afloat whenever the market decides to swing Soith, you are also preparing yourself for the bull run as you would be well positioned across diverse categories of the market.

Don’t Just Jump into Trades, Plan each Trade Carefully

This cannot be overemphasized. If you still jump into trades with no proper research, or just because it is pumping at a particular time- I wouldn’t feel for you if the market punishes your greed.

Traders who know their onions have a laid down plan for point of entry, and point of exit. They prepare for scenarios where the trade goes South and where they can start cutting their losses. They don’t just go into a trade blindly.

Planning your trade also gives you more control of your emotions as sticking to your plan regardless of whatever the market is saying shows that you are capable of managing your emotions.

Your trading plan should contain where you plan to take profit and stop loss, strategies throughout the trade in case something happens to change the narrative you would desire,

This would not only help you develop good risk management practices but also help you to reduce losses you would have faced due to the volatility of the market.

Keep the Majority of Your Portfolio In Stables

Away from diversifying your portfolio, there is also a sense of keeping the bulk of it in stables like BUSD, BUSD, or USDT.

Even if the market crashes for whatever reason, these are backed to the US dollar and would not feel the impact as much as the alt and meme coins.

You can also provide liquidity to markets if you would rather not keep it in your wallets. This would also give you liquidity incentives via getting trading fees, etc.

Do Lots of Journaling, Especially as it Concerns Your Mistakes and Successes

Journaling gives you the means to track the mistakes you have made, as well as the times when you were successful.

Taking a record of those times when greed or FOMO made you have losses, can help you in the future to remember the experience and thus guide your decisions better.

With more experience, you will learn to see certain situations for what they are and act according to facts instead of emotions. You can easily go back in time to see the errors you made and map out better ways to handle them if such a situation comes up again.

Understand that Losing is Inevitable

As much as you are trying to reduce the number of losses you have, it is important to point out that loss is part of the system. You can’t escape it. You can only manage it and reduce the number of losses you face.

Regardless of whatever precautionary measure you take, there is still a probability of losing your funds as trading is all a game of probability. This is why this warning is always shared- “do not invest more than you can afford to lose.”

What I do now to have peace is that I tell myself that anything can happen. “As much as there is a possibility of making 5x or 10x from this trade, it can also go Soith and I can lose all.”

This has made it easier to accept any losses even whilst all other conditions have been well taken care of- done adequate research on the token, planning my trade entry and exit, not FOMOing, etc.

Of course, if everything goes in my favor and I make profits, I get elated that I won the market. LOl! You can also take a similar approach and watch how it works for you.

Final Words

If you can accept losses as part of the process, you will be able to brace yourself for the impact of when it happens.

By following the strategies in this article, you will be well protected from the market’s volatility. These strategies will assure you that you did everything you possibly could to prevent losses, that is if they still come after all of the aforementioned is in place.